There is no reason the entire game couldn't be on the disk and working as intended.
The reason there is such a large day one update is simply that games are released unfinished and/or untested. This isn't the fault of the medium. This is a systemic video game industry problem.
(The following comment agrees with you, it is not intended as an argument against what you’re saying):
Technically being able to contain the content and actually being able to boot the game from the disc (after transferring to the console hard drive) are two separate things. Even without counting Day 1/Day 0 patches. Some games refuse to run without downloading additional content that isn’t on the disc, others require talking to a server even if you’ve just downloaded the latest updates, others. A patch to fix bugs and add content is one thing, refusing to play entirely is another.
There is no reason the entire game couldn't be on the disk and working as intended.
The reason there is such a large day one update is simply that games are released unfinished and/or untested. This isn't the fault of the medium. This is a systemic video game industry problem.